Jaguar and Land Rover loan confirms hybrid Posted 2010/02/26 @ 07:00 AM By Myles Kornblatt
Jaguar and Land Rover will be heading into hybrid territory. Although both companies have hinted at dabbling into alternative fuels and electric drivetrains, a £340 million loan (currently about $517 million) was granted to the company specifically for the “development of micro and full hybrid drive trains and research into more energy efficient car bodies”.
Jaguar Land Rover’s parent company Tata is taking advantage of eco-funding to help stabilize the luxury carmakers. As Europe gets more green minded, it’s looking for more opportunities to reduce emissions and waste. The loan was secured through the publicly owned European Investment Bank, and according to the press release, the loan was granted under the European Clean Transport Facility.
Neither Jaguar nor Land Rover currently offers a hybrid vehicle, but both brands have smaller (i.e. lighter) vehicles in different planning stages that could be receptive to hybrid technology. Land Rover's smallest SUV, the LRX, is on schedule for mid-2011, and it’s rumored to have an available diesel V6 paired to an electric motor. Jaguar has been hinting at a coupe/roadster called the XE to fit below the XK. This car could possibly take advantage of it's size and weight to get noticeable performance benefits from an electric boost. Jaguar may also go in the opposite direction with hybrid technology and use an electric motor to increase the range of its flagship XJ in a similar fashion to Rolls-Royce’s plans with the Ghost and Cadillac’s XTS concept.
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We won't try to guess how much of this technology will make it to the U.S. Jaguar and Land Rover did not exactly build their international reputations for providing efficient cars, and this is especially true in North America. Jaguar and Land Rover don't sell the their more fuel-efficient diesels here because the lower-powered (but higher torque) engines would likely languish on dealer lots.
But as fuel economy standards for companies rise, diesels are a quick and easy way for Jaguar and Land Rover to bring their average MPGs up in the U.S. without having to carry a few token Tata cars on their lots. Plus, the British company's attitude towards diesels may change as other European companies are trying to warm up Americans to the idea of these oil burners.
PRESS RELEASE
Tata Motors today announced the completion of a GBP 340 million loan from the European Investment Bank (EIB) to Jaguar Land Rover. The facility is an 8 year amortising loan to finance development of micro and full hybrid drive trains and research into more energy efficient car bodies for the premium car segment by Jaguar Land Rover. These activities will contribute to lower CO2 emissions and the loan was granted under the European Clean Transport Facility.
The loan is structured with guarantee support from banks, with Credit Suisse working in the lead with Jaguar Land Rover and Tata Motors in arranging the structure. State Bank of India played a key role in the facility, providing a guarantee along with Bank of India and Bank of Baroda. Credit Suisse, Standard Chartered Bank, Deutsche Bank and JP Morgan are providing additional guarantees to meet EIB credit requirements.
Mr. Ravi Kant, Vice Chairman of Tata Motors, said: “We are very happy with the support extended to us by the European Investment Bank, State Bank of India, Credit Suisse, and other banks. This will support the progress of turnaround in Jaguar Land Rover's business in challenging market conditions, alongside cost cutting measures, increase of volumes and the improved margins strategy currently being implemented by Jaguar Land Rover. We view Jaguar Land Rover as a key part of Tata Motors and we feel confident about its outlook for the future.”
Mr. Simon Brooks, European Investment Bank Vice President responsible for lending operations in the United Kingdom, said: “The EIB is pleased to be able to work closely with Tata Motors and Jaguar Land Rover to make a lasting contribution to automotive research that will enable the production of more environmentally friendly and energy efficient vehicles at a time of significant challenges for the European car industry.”
The EIB loan completes the last major element of the funding plan for Jaguar Land Rover, which has been an important part of Tata Motors’ efforts to strengthen its group balance sheet over the past year. In 2009, the company secured over £500 million of funding for Jaguar Land Rover, including facilities from State Bank of India, Standard Chartered Bank, Bank of Baroda, ABC International bank, GE Capital, and Burdale Financial Limited, a subsidiary of the Bank of Ireland.
Moreover, despite the very difficult financial environment since June 2008 when Jaguar Land Rover was acquired, Tata Motors had, by October 2009, completely repaid the USD 3.0 billion bridge finance facility for the acquisition of Jaguar Land Rover, through a combination of Rights Issue in 2008, issue of long maturity Non-convertible Rupee Debentures, internal cash flows, sale of investments, and issue of Global Depository Shares and Convertible Notes in October 2009.
Commenting on the overall financing efforts being made by Tata Motors, Mr. C. Ramakrishnan, Chief Financial Officer of the company, said: “We have taken significant steps to meet our financing requirements and strengthen our balance sheet over a short timeframe in challenging and adverse market conditions. We are thankful to have received the support of Tata Sons, all investors and relationship banks. The business performance of our Indian and international operations have improved significantly and we feel comfortably positioned for the future.”
